Morgan Stanley finally returns to profitability, the Bank of England says enough on the bond-buying thing, and the euro crosses $1.50. It’s Tomorrow’s News Today.
Of course, we don’t talk about what will surely be the top news story tomorrow, the late stock selloff. That’s the perils of taping these segments early.
And what I find most interesting about that BofE statement is that they’re apparently saying, the UK economy’s gotten about as much out of the bank’s stimulus policies as it’s going to get, and they’re not inclined to do more. A bit of a contrast with our Federal Reserve, which is still retaining the option of keeping any or all of its stimulus spigots wide open.
US stocks reverse direction sharply in the final hour, sending the major indexes into the red, after the White House’s “pay czar” orders salary cuts at seven wards of the state, and Rochdale’s Dick Bove cuts Wells Fargo to sell.
DJIA loses 92 (0.9%) to 9949, after rising as much as 78 earlier. S&P 500 drops 10 (0.9%) to 1081, rising as much as 10, and briefly touching 1101, topping out at 1101. Nasdaq Comp falls 13 (0.6%) to 2151.
Stocks were modestly higher for most of the day, as the dollar was falling and crude was over $81/barrel. Beige book sees tepid signs economy’s improving, but notes demand and labor remain weak. Morgan Stanley posts first quarterly profit in a year.
The trigger appears to have been this Bove downgrade, but really, there were other headwinds.
It doesn’t take much for bloggers to start bashing something or someone. But pay close attention when they start dishing out praise, because they’re generally on to something good.
Focus has turned to former Fed Chairman Paul Volcker’s recent comments regarding big banks. He believes too-big-to-fail institutions should be broken up and wants the biggest banks to be prohibited from owning and trading risky securities. From NYT:
Mr. Volcker’s proposal would roll back the nation’s commercial banks to an earlier era, when they were restricted to commercial banking and prohibited from engaging in risky Wall Street activities.
The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration’s proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses.
There were a couple of things that occurred to me while watching “The Warning” last night, the Frontline documentary that recounted the 1998 battle between Brooksley Born, then head of the Commodities Futures Trading Commission, and Robert Rubin, Alan Greenspan and Lawrence Summers — the so-called “Committee to Save the World” — over the regulation of the derivatives market. Turns out Born was the one trying to save the world, the others were trying to save somebody else’s bottom line.
Anyhow, beyond thinking, I wonder how the Yankess are doing, here are the three key takeaways that occurred to me during the one-hour special:
1. This was a 100% man-made crisis.
From the near-failure of Long-Term Capital Management in 1998 onward, there were key developments that could have turned this Great Recession into either a merely typical downturn, or no downturn at all even
Bailing out LTCM set the “too big to fail” trade in motion. Not regulating derivatives created a Wild West outpost on Wall Street. Cutting interest rates to 1% to fight the ’01 recession sparked the disastrous housing boom. Rescinding the cap ratios on Wall Street in 2004 was the last stick of dynamite in the box.
At every step, people had the chance to make a right decision, and didn’t. Born tried to do the right thing, and was hogtied and railroaded out of Washington. And that leads me to my second point.
Moderate pullback in US equity markets yesterday, despite what’s generally perceived as a positive tone for 3Q results so far, suggests bottom-line improvements are already well-priced in to stocks at this point. Markets seem priced for perfection, not only in terms of earnings, but also on positive progress in economic data.
High-profile profit reports coming this morning from Boeing, Morgan Stanley and Wells Fargo. EBay reports after the closing bell.Investors were pleased with Yahoo’s 3Q report late yesterday, shares up 3.9% premarket.
US dollar index slipping, oil futures also lower, disconnecting from their inverse tack from dollar. S&P futures down 5.6, DJ futures down 49. Ten-year slightly lower, yield at 3.35%.
Looks like Boeing’s going to weigh on the Dow for a second day. Yesterday, Morgan Stanley downgraded the company, on concerns over the potential for even more delays with its new planes. Today, Boeing reported a 3Q loss on charges (previously disclosed) from those delays.
And while the big banks are all playing the same tune, earnings reports from Bank of NY Mellon and Regions Financial, among other regional banks, continue to illustrate that “the credit challenges these firms face are not offset by other income sources and are not improving meaningfully yet,” analysts at JPM say.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
President Reagan’s former budget director David Stockman says Edward Snowden performed a heroic act, the Patriot Act should be repealed, and this whole spying-on-U.S.-citizens thing is a symptom of an out-of-control military-industrial complex. Click here to watch him go on YahooFinance. The author of “The Great Deformation: The Corruption of Capitalism in A […]
